There were a few economic releases last week, kicking off with consumer sentiment data.

Consumer sentiment dropped 2.6% in May, down to its lowest level in two years, although consumer confidence in the economy remained strong.

Rising prices and the impact of higher interest rates on highly-indebted households are major reasons behind the erosion of consumers’ confidence.

The market took the weak consumer data as a sign that interest rates might remain on hold for some time, but this was dispelled when RBA chief Glenn Stevens brushed aside the data.

Stevens, making his first public speech in two months, continued to take a broader view of Chinese growth and its positive impact for Australia, reiterating his view that the mining boom is benefitting the wider economy.

He repeated his stance that the structural nature of this once-in-a-generation boom will inevitably lead to higher interest rates.

Stevens’ comments seemed a clear pointer to the market not to get too ahead of itself, after investors had recently lowered their expectations of higher rates after a raft of soft economic data readings.

Next month’s inflation figures will hold the key to further interest rate rises, with a high reading likely to trigger a rate rise in August.

Overseas Market and Commodity Wrap:

Most global markets were weaker last week, as political uncertainty in Greece stoked fears the country wouldn’t be able to implement austerity measures necessary to attract a second financial bailout.

US markets were mixed, with a couple of large losses during the week offset by a bit of a recovery. The Dow gained 0.4% but the S&P 500 was flat and the Nasdaq fell almost 1% for the week.

The UK market was also weighed down by Greek debt fears, with European banks more exposed to a possible default. The FTSE dropped 1% last week.

Asian markets were even weaker, despite some positive economic data from China on Tuesday.

The Shanghai Composite fell 2.1% for the week and the Hang Seng slumped 3.6%. The Nikkei was one of the best Asian indices, but still dropped 1%.

The Aussie market closed its shortened trading week (the Australian market was closed shut on Monday for the Queen’s Birthday holiday) with a 1.7% loss.

Most commodities closed lower last week, as nervous investors shifted funds back into US dollars.

Gold was a rare winner, benefitting from investors flocking to safe-haven assets. The shiny metal rose 1.5% and silver gained 3.3% but fellow precious metals were not so fortunate. Platinum lost 2.6% last week and palladium crashed 6.4%.

Oil prices slumped on global demand concerns and reports that Saudi Arabia will increase its supply.

Almost all the base metal prices closed lower last week. Lead (-3.7%), nickel (-2.9%) and zinc (-2.8%) were the hardest hit, while copper was the lone gainer, up 2.1%.

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